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Tuesday, 16 November 1993
Page: 2940

Senator REID (9.55 p.m.) —I wish to speak to the superannuation bills because I wish to point out to the government that there are some matters in relation to superannuation that it has not yet dealt with and that I regard as urgent. These seven bills, as has already been stated, strengthen and codify the prudential standards for superannuation funds. I do not think anybody who has spoken or participated in this debate doubts the need for this or fails to support it.

  But, in spite of the number of bills that have gone through the parliament since the Labor government came into operation—there have been something like 80 pieces of legislation in 10 or so years that have dealt with superannuation—I do not think that the government has really come to terms with the fact that retirement income is a very important issue in our community.

  The government does not yet seem to have recognised that the quite rapid ageing of the population into the years of the next century will have a significant impact on a lot of people. There will be fewer taxpayers than at present; there will be more people beyond working age. There is, I think, an urgent need to deal with retirement income policy in a realistic fashion, particularly for women, who so far have been virtually ignored by Labor's policies. I am not suggesting for a minute that the government has not done anything at all, but it has not dealt with half the population.

  The figures indicate the considerable increase in the amount of money that has gone into superannuation funds—from $32.6 billion in 1983 to $140 billion in 1992. With the superannuation guarantee charge, that amount will rise significantly. So it is absolutely essential to deal with the management of the funds—to see that that is done properly, that there is little risk of funds failing and members' money being lost, and that there is a minimum risk of fraud, misappropriation or things of that nature.

  The Select Committee on Superannuation, whose report Safeguarding super has been quoted tonight, stated that it was `conscious that increases in superannuation savings will inevitably attract operators who will seek to use superannuation moneys for their own use'. That is pretty strong stuff and it is important that the government has responded, I think, with the legislation we have before us tonight.

  Previously, the legislation sought to regulate indirectly. This package of bills regulates more directly. But it is the other areas that I mentioned that still need to be pointed out. There are three in particular. The first I refer to is the fees and charges which are being charged by superannuation funds at the present time which erode the value of super. It certainly does so for those who are part-time workers, of whom women form a considerable section.

  The second is the inability of anybody who has been out of paid employment for more than two years to pay into a super fund. Again, significantly, it is women who fall into that category. I can see absolutely no rational explanation for why that should continue, why we cannot devise rules for superannuation which enable it to continue beyond a period of two years so that one could start paying in again in the future, why one cannot have a superannuation fund that remains intact when one changes employers. Every time someone changes an employer, what has been paid in becomes virtually worthless because the amount that that person receives back when that happens is so little, as I have mentioned previously when I have spoken on these issues. It can be done if one has the will to do it.

  Another aspect I want to mention is that superannuation is dealt with in Family Court proceedings following the breakdown of a marriage. Certainly superannuation is taken into account as property—but not as superannuation, not as retirement income. I do not think that the Labor Party recognises superannuation for its own value and importance. Indeed, some of the legislation that has been brought before us suggests that the government has looked at superannuation more as a means of revenue raising or as part of a wages package in the context of industrial bargaining—not as retirement income for its own intrinsic value. I think it is time we confronted the very unfair treatment for women in particular that occurs as a result.

  Women receive lower wages than men. Either they are still not getting equal pay for work of equal value, or they are not getting the opportunity to do work which pays the same wage rate as that received by men. Two-thirds of women earn average incomes below $21,000, while the average income for the same number of men is above $21,000. As I said, either women are not getting paid or they are not getting the opportunity to participate. As a consequence, they get a smaller benefit at retirement.

   Australian women constitute the majority of the aged population and they will continue to do so. That is clear. For that reason, they are being disadvantaged as they get to an age beyond which they are able to work and increase their own income. The traditional male patterns of work which seem to be still the basis of superannuation do not favour women and do not give them an opportunity to participate. Superannuation is based on people being virtually in one job for the full 40-odd years of their working life, in full-time employment, coming to retirement age and then moving into superannuation. A lot of women now are doing that, but they are a very small proportion of the total. With a bit of imagination, with a bit of will to include women in superannuation schemes, this could be changed. I believe it will be a long time before most women fall into the male work pattern, which is the basis of superannuation at the present time.

   I mentioned being out of the work force for more than two years. As I conceded, it is not just a female question, but frequently that is the case. Why can a superannuation scheme not be individual to a person so that during your working life your employer can pay into it what should be paid while you are employed; so that you can contribute to your own superannuation scheme from such savings as you may be able to contribute during your working life; so that you may be able to pay into your own superannuation scheme money that you come by, perhaps by way of an inheritance or a lucky day at the races. In many instances in a divorce settlement there are cases where a woman receives a certain amount of money and she may well be better advised to place that sum of money into her own personal superannuation scheme than to deal with it in any other way. That is not so in all cases, but in many instances that may in fact give her much better retirement income in the longer term.

  There are about two million women who are not in the paid work force who are totally denied access to superannuation because the basis of superannuation is that you have to be in paid employment. There is no reason why there cannot be retirement income schemes of the same kind we are talking about tonight for somebody who is not in paid employment for the whole of her life, perhaps not in paid employment for very much of her life, schemes that give heer access to retirement income of the kind that she will need.

   Superannuation in the context of the Family Court has been dealt with in other places and I will not go into it in detail tonight. I merely remind the Senate, and in particular the government, that in many instances the female partner in a divorce does not have superannuation. When we take into account the value of superannuation at the time of divorce as an item of property, it does not indicate its true value in the longer term. It does not ensure that the other party in fact has superannuation in the longer run. I think it is time for the government to deal with that aspect and I hope it will do so before too long.

   I was going to quote from the Law Reform Commission recommendation. Perhaps rather than my reading out the section dealing with women and superannuation, the Parliamentary Secretary to the Minister for Primary Industries and Energy (Senator Sherry), who is at the table, may agree that those sections of the Law Reform Commission report be incorporated in Hansard. I rely on them in support of my argument for that purpose. I seek leave to incorporate those pages in Hansard.

  Leave granted.

  The pages read as follows

  Extent to which superannuation taken into account. Superannuation entitlements were available to a significant number of respondents in the survey of Family Court cases. For example, in the sample of applications for approval of s 87 agreements, 45% of men and 15% of women were said to have these entitlements.(24) The Australian Institute of Family Studies survey, summarised in chapter 6, disclosed that, amongst younger couples, just over 50% of husbands and 8% of wives were members of superannuation schemes; and that amongst older couples just under 50% of husbands and 16-19% of wives were members of such schemes.(25) However, both studies demonstrated that superannuation is often ignored and, when not ignored, is not taken into account in any clear or consistent way. The Australian Institute of Family Studies research showed that in many cases, even amongst the older respondents, superannuation was not taken into account in property division. It was taken into account in only 46% of possible cases according to the older men and 39% of possible cases according to older women. Amongst younger couples, it was taken into account in only 38% of possible cases according to men and 20% of possible cases according to women.(26) Where superannuation had not been taken into account three quarters of the survey respondents claimed that they had not received advice that superannuation was relevant.(27) This is despite the fact that, where the value ascribed to the superannuation is added to the general pool of property, superannuation ranks as a significant asset. The absence of superannuation and life insurance policies in the pool of available property pushes the average share of property currently going to wives down by about 10% according to women and by about 5% according to men, when taking the older and younger groups together. The inclusion of superannuation would therefore have a significant effect on the overall shares.(28)

Senator REID —I want to refer to the unfair treatment of casual, part-time itinerant workers under the legislation as it presently exists, two million or 80 per cent of whom are women. I have referred previously to examples where a part-time worker virtually gets nothing out of superannuation. I gave the details previously of Jessica Mehta, who is a constituent of mine. She went to work for a company in Canberra from January of 1991 to May of 1991 working 20 hours a week on a casual, part-time basis. She has been doing this for some time; she has been in and out of jobs of this nature.

  She did not even know that money was paid by her employer for superannuation under the superannuation guarantee levy. But in fact it was and, over the period I just mentioned, some $165 was paid to CANPLAN Multi-Industry Superannuation Plan 330, which was the superannuation fund that her employer paid into. Regrettably, an employer regards the levy virtually as a tax, which it is to the employer. The employer has no reason to take any interest or concern in what happens to the contribution that he or she is forced to make. Of course, the employee does not contribute at all. So off goes the money into some unseen superannuation fund which does with it pretty much as it seems to like.

  After Mrs Mehta left this period of employment, in fact nearly 12 months later, she received a cheque for $34.69. The employer, as I said, had paid $165 and a bit more. The super fund had deducted $137.30 by way of charges. She got $34.69. That has nothing to do with retirement income policy. It has nothing to do with providing for people when they get to the end of their working lives. The outrageous charges and levies which operate mean that, for these sorts of people, there is almost nothing left at all. In a minute I will give honourable senators a couple of instances where there was nothing left at all.

  The employees have no choice about where the money goes. In many instances, they do not even know that it has been paid on their behalf. In my opinion there is no sincerity in the government's policy of superannuation when it sets up a structure which totally ignores the needs of itinerant, casual, part-time people in the work force. These people fulfil a significant role. I wish to quote from a letter that was written by two people who work in the industry of harvesting fruit and vegetables during certain times of the year. The letter states in part:

Last year (1992-93) my husband and I worked for a number of people as harvest workers. At each new place of employment we were enrolled in a superannuation scheme of the employers choice—we were given no opportunity to discuss or choose a plan, in fact in nearly every case it was done without any consultation with us at all. As a result we were enrolled in four different plans, twice with the same company!

The letter goes on to point out exactly how much of it was gobbled up by the administration levies and taxes. They refer to the number of phone calls made and the reams of paper used before they received any information about what had happened to the money that the employer had paid into the employer's chosen plan. There was no reason why the employer should take any interest; to the employer, it was just a tax.

  Superannuation is not working for casual employees, part-time employees or itinerant employees. It is a massive waste of money that is doing nothing to benefit those whom, allegedly, it is supposed to benefit.

  These two people worked at four different places. One job involved picking cherries and I am not quite sure what they were doing at the other three, but in each case the employer paid the money. In one instance, in the end, the wife got back $6.39 and the husband got $7.50. Each of them got back $88 from another employer and absolutely nothing from the other two, which were with the Australian farm superannuation plan.

  I am prepared to concede that the government has attempted to legislate to make superannuation meaningful but, in my opinion, it is very significantly on the wrong track and not dealing with the needs of a very significant section of the work force. Until that need is met, those who, as a consequence, will be doomed to have nothing but the age pension when they retire will very likely be much worse off than they would be at present, given, as I stated at the beginning, that the number of taxpayers in the community will inevitably decline as the population ages, and people live much longer beyond working age than people have in the past and make demands on the system.

  This could be easily rectified if the government set up a personal superannuation scheme for those who have turned 18, so that moneys could be paid in by the employer and the employee, and other moneys could be paid in by other people or as it becomes available. People who are out of the work force because they are unemployed for more than two years, as at present, or women who are out of the work force for five years while they have children and look after them while they are young, would find the money still available and not gobbled up with administration charges and levies, which is what presently happens. In the end, we would have a superannuation scheme which would be meaningful and worth while for this country.